Dsm Dyneema, LLC v. Thagard

DSM Dyneema, LLC v. Thagard, 2015 NCBC 47.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
GASTON COUNTY 13 CVS 1686

DSM DYNEEMA, LLC,

Plaintiff,

v.

JAMES THAGARD, Ph.D.; ORDER AND OPINION
HONEYWELL SPECIALTY
MATERIALS, LLC; HONEYWELL
ADVANCED COMPOSITES, INC.;
and HONEYWELL
INTERNATIONAL, INC.,

Defendants.

{1} THIS MATTER is before the Court upon Defendants Honeywell Specialty
Materials, LLC, Honeywell Advanced Composites, Inc., and Honeywell
International, Inc.’s (collectively, the “Honeywell Defendants”) Motion for Judgment
on the Pleadings (the “Honeywell Motion”); Defendant Dr. James Thagard’s
(“Thagard”) Motion for Judgment on the Pleadings (the “Thagard Motion”); the
Honeywell Defendants’ Motion for Protective Order (the “Motion for Protective
Order”); and Plaintiff DSM Dyneema, LLC’s (“Plaintiff” or “DSM”) Motion to
Compel Responses to Requests for Production (the “Motion to Compel”) (collectively,
the “Motions”). After review of the Motions, briefs in support of and in opposition to
the Motions, and the arguments of counsel at a hearing held on January 21, 2015,
the Court DENIES the Honeywell Motion, GRANTS in part and DENIES in part
the Thagard Motion, GRANTS in part and DEFERS in part DSM’s Motion to
Compel, and DENIES in part and DEFERS in part the Honeywell Defendants’
Motion for Protective Order.
McCullough Ginsberg Montano & Partners LLP by Theodore McCullough and C.
Dino Haloulos, and Bell, Davis & Pitt, P.A. by Edward B. Davis and Kevin G.
Williams for Plaintiff DSM Dyneema, LLC.
Kirkland & Ellis LLP by Craig S. Primis and Daniel A. Bress, and Erwin,
Bishop, Capitano & Moss, P.A. by Joseph W. Moss, Jr., and Lex M. Erwin for
Defendants Honeywell Specialty Materials, LLC, Honeywell Advanced
Composites, Inc. and Honeywell International, Incorporated.

Ogletree, Deakins, Nash, Smoak & Stewart, P.C. by Robert A. Sar, Phillip J.
Strach, and J. Allen Thomas for Defendant James Thagard, Ph.D.

Bledsoe, Judge.
I.
FACTUAL AND PROCEDURAL BACKGROUND
{2} Relevant factual and procedural background of this case is recited in detail
in DSM Dyneema, LLC v Thagard (the “P.O. Order”), 2014 NCBC 50 (N.C. Super.
Ct. Oct. 17, 2014), www.ncbusinesscourt.net/opinions/2014_NCBC_50.pdf (denying
motion to compel and granting motion for protective order). The Court, however,
does not make findings of fact on motions for judgment on the pleadings under Rule
12(c), but only summarizes the pleaded facts giving all reasonable inferences to the
non-moving party. Erickson v. Starling, 235 N.C. 643, 657, 71 S.E.2d 384, 394
(1952); Tong v. Dunn, 2012 NCBC 29 ¶ 12 (N.C. Super. Ct. May 18, 2012),
http://www.ncbusinesscourt.net/opinions/2012_NCBC_29.pdf, rev’d on other
grounds, 2013 N.C. App. LEXIS 1303 (N.C. Ct. App., Dec. 17, 2013).
{3} Plaintiff and the Honeywell Defendants are competitors in the ballistic
performance material production industry and historically have competed for
United States Department of Defense contracts involving the development of fibers
used in enhanced combat helmets (“ECH”). Plaintiff specifically developed its ECH
designs for use in combat helmets manufactured by Ceradyne, Inc. (“Ceradyne”).
{4} In 2010, the Honeywell Defendants hired Defendant Thagard, who was
Plaintiff’s former chief scientist and technical leader and previously oversaw
Plaintiff’s ECH program. In February 2013, Ceradyne ended its relationship with
Plaintiff and awarded an ECH contract to the Honeywell Defendants.
{5} Thereafter, on August 2, 2013, Plaintiff filed its Amended Complaint in
Gaston County Superior Court, asserting claims against the Honeywell Defendants
and/or Defendant Thagard for misappropriation of trade secrets under N.C. Gen.
Stat. § 66-152 et seq. (“TSPA”), tortious interference with existing and prospective
business relations, tortious interference with contract, conversion, breach of
fiduciary duty, breach of contract, unjust enrichment, and unfair and deceptive
trade practices under N.C.G.S. § 75-1.1 (“UDTP”).
{6} Plaintiff identified its trade secret material in its Amended Complaint as
follows:
[d]uring the course of his employment with DSM, Thagard was
exposed to confidential and proprietary business information, trade
secrets, and know-how of DSM, including, but not limited to, technical
information and formulas, proprietary product development
information and technical know-how regarding the Dyneema HB80
UHMWPE material and regarding the incorporation of Dyneema HB80
into helmets for optimal performance, proprietary development tools,
proprietary software applications, design details, product design and
application (including, but not limited to, resin types, matrix
characteristics, fiber properties, number of plies, air content, stiffness,
and aging), processing know-how, manufacturing know-how (including,
but not limited to, creep forming, vacuum processing, deep draw,
optimal temperature and pressure, and adhesives), matrix stiffness,
ratio of resin to fiber, interlaminar strength, areal density, elasticity,
flexural properties, tenacity, matrix interface, role of coefficient of
thermal expansion, prevention of delamination and other deformation,
test methods and results, marketing and sales strategies and practices,
pricing and contractual details for customers, customer profits,
business costing data, customer correspondence, business plans, area
plans, license reviews, proposed applications, meeting minutes,
marketing data, customer lists, prospect lists, competitive bid
information, employee lists, and internal strengths and weaknesses,
among other information (the “Trade Secrets”). DSM’s Trade Secrets
also include the results of DSM’s resin and materials testing program,
which include the optimal number of filaments per ply to increase
performance, optimal resin types, proprietary information and
technical know-how regarding optimal temperature, and proprietary
information and technical know-how regarding effective pressure.
DSM’s Trade Secrets were developed, used, and expanded while
Thagard oversaw DSM’s ECH Project and the development of DSM’s
ECH product.
(Am. Compl. ¶ 14.) 1

1 DSM contends that the Honeywell Defendants and Thagard’s Motions for Judgment on the
{7} DSM subsequently sought discovery of the Honeywell Defendants. The
Honeywell Defendants objected to DSM’s discovery requests as overbroad, vague,
and unduly burdensome and refused to produce responsive documents because
Plaintiff had not yet “identified with any reasonable degree of particularity the
confidential trade secrets that it claims to be protecting through this action . . . .”
After the parties were unable to reach agreement, DSM filed a Motion to Compel
and the Honeywell Defendants filed a Motion for Protective Order. In an Order and
Opinion entered on October 17, 2014, the Court concluded that DSM had not
identified its trade secrets with sufficient particularity at the pre-discovery stage of
the litigation to require the Honeywell Defendants to produce their confidential and
trade secret information in discovery. P.O. Order, 2014 NCBC 50. The Court
required DSM to supplement its responses to the Honeywell Defendants’ discovery
requests. Id. at ¶ 27.
{8} DSM supplemented its trade secret identification on November 20, 2014,
and simultaneously requested that the Honeywell Defendants respond to DSM’s
Discovery Requests2 and divulge relevant trade secret information. The Honeywell
Defendants refused to respond, citing their belief that DSM had not adequately
complied with the Court’s P.O. Order. Subsequently, on December 10, 2014, DSM
filed its Renewed Motion to Compel and Request for Expedited Procedures. The
Honeywell Defendants followed suit and filed a Motion for Judgment on the
Pleadings and a Motion for Protective Order on December 22, 2014. Upon consent
of the parties, the Court set a briefing schedule, which required that briefing of
DSM and the Honeywell Defendants’ Motions be completed on January 16, 2015.

Pleadings should be considered as Motions for Summary Judgment because the Court must consider
DSM’s supplements to its trade secret identification contained in the Amended Complaint. The
Court rejects this argument and considers only DSM’s trade secret identification contained in the
Amended Complaint in deciding the Defendants’ respective Motions for Judgment on the Pleadings.

2 DSM moves to compel, and the Honeywell Defendants move for protective order concerning,
responses to (i) DSM’s First and Second Sets of Request for Production, served April 1, 2014 and May
7, 2014, respectively, as modified by DSM’s letter to the Honeywell Defendants on July 18, 2014, and
(ii) certain of DSM’s interrogatories to which the Honeywell Defendants have objected on the basis of
DSM’s allegedly insufficient identification of its trade secrets (collectively, “DSM’s Discovery
Requests”).
The Court held a hearing on the DSM and Honeywell Defendants Motions on
January 21, 2015, at which all parties were represented by counsel.
{9} On February 6, 2015, Thagard filed his Motion for Judgment on the
Pleadings. Briefing on Thagard’s Motion was completed on March 4, 2015. As
Thagard’s Motion is based largely on the same arguments advanced in the
Honeywell Defendants’ Motion for Judgment on the Pleadings, the Court dispenses
with a hearing on Thagard’s Motion for Judgment on the Pleadings. The Motions
are now ripe for resolution, and the Court takes each Motion in turn.
II.
ANALYSIS
A. The Honeywell Motion
{10} “A motion for judgment on the pleadings should not be granted unless the
movant clearly establishes that no material issue of fact remains to be resolved and
that he is entitled to judgment as a matter of law.” Carpenter v. Carpenter, 189
N.C. App. 755, 761, 659 S.E.2d 762, 767 (2008) (observing “[j]udgments on the
pleadings are disfavored in law”). “A complaint is fatally deficient in substance, and
subject to a motion by the defendant for judgment on the pleadings if it fails to state
a good cause of action for plaintiff and against defendant.” Bigelow v. Town of
Chapel Hill, 745 S.E.2d 316, 319 (N.C. Ct. App. 2013). The motion’s purpose is “to
dispose of baseless claims or defenses when the formal pleadings reveal their lack of
merit.” Washburn v. Yadkin Valley Bank & Trust Co., 190 N.C. App. 315, 322, 660
S.E.2d 577, 583 (2008). The Court may only consider “the pleadings and exhibits
which are attached and incorporated into the pleadings.” Davis v. Durham Mental
Health/Development Disabilities/Substance Abuse Area Auth., 165 N.C. App. 100,
104, 598 S.E.2d 237, 240 (2004). The Court “is required to view the facts and
permissible inferences in the light most favorable to the nonmovant,” Bigelow, 745
S.E.2d at 319, and should deny a Rule 12(c) motion if the complaint “gives sufficient
notice of the events or transactions which produced the claim to enable the adverse
party to understand the nature of it and the basis for it, to file a responsive
pleading, and – by using the rules provided for obtaining pretrial discovery – to get
any additional information he may need to prepare for trial.” Id. (quoting Sutton v.
Duke, 277 N.C. 94, 104, 176 S.E.2d 161, 167 (1970)).
{11} The Honeywell Defendants seek dismissal of DSM’s Amended Complaint
on the grounds that (1) DSM has failed to allege its trade secrets with sufficient
particularity under North Carolina law, and (2) DSM has failed to allege a
cognizable claim for misappropriation by relying upon a theory of inevitable
disclosure rather than pleading facts showing that actionable misappropriation has
occurred.
i. Trade Secret Misappropriation
{12} A trade secret is defined in N.C. Gen. Stat. § 66-152(3) (2001) as follows:
Business or technical information, including but not limited to a
formula, pattern, program, device, compilation of information, method,
technique, or process that:

a. Derives independent actual or potential commercial value from
not being generally known or readily ascertainable through
independent development or reverse engineering by persons who can
obtain economic value from its disclosure or use; and

b. Is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

{13} Misappropriation is defined as the "acquisition, disclosure, or use of a
trade secret of another without express or implied authority or consent, unless such
trade secret was arrived at by independent development, reverse engineering, or
was obtained from another person with a right to disclose the trade secret." N.C.
Gen. Stat. § 66-152(1) (2001).
{14} To determine what information should be treated as a trade secret under
the TSPA, the Court should consider the following factors:
(1) the extent to which the information is known outside the business;
(2) the extent to which it is known to employees and others involved in
the business;
(3) the extent of measures taken to guard secrecy of the information;
(4) the value of the information to business and its competitors;
(5) the amount of effort or money expended in developing the
information; and (6) the ease or difficulty with which the information
could properly be acquired or duplicated by others.

TSG Finishing, LLC v. Bollinger, 767 S.E.2d 870, 876 (N.C. Ct. App. 2014)
(quotation and citation omitted).
{15} “To make a prima facie case of trade secret misappropriation, a plaintiff
must show that a defendant: ‘(1) [k]nows or should have known of the trade secret;
and (2) [h]as had a specific opportunity to acquire it for disclosure or use or has
acquired, disclosed, or used it without the express or implied consent or authority of
the owner.’” GE Betz, Inc. v. Conrad, 752 S.E.2d 634, 649 (N.C. Ct. App. 2013). At
the pleading stage, our courts require only that a plaintiff “identify a trade secret
with sufficient particularity so as to enable a defendant to delineate that which he
is accused of misappropriating and a court to determine whether misappropriation
has or is threatened to occur.” Washburn, 190 N.C. App. at 326, 660 S.E.2d at 585.
It is not sufficient for a plaintiff to make “general allegations in sweeping and
conclusory statements, without specifically identifying the trade secrets allegedly
misappropriated.” Id. at 327, 660 S.E.2d at 585–86. Additionally, a plaintiff must
allege the acts by which the alleged misappropriation was accomplished. Id. at 327,
660 S.E.2d at 586.
{16} For its first argument in support of dismissal, the Honeywell Defendants
contend that DSM’s description of its trade secrets in the Amended Complaint is not
sufficiently particular to apprise the Honeywell Defendants of what they are
accused of misappropriating. This is so, according to the Honeywell Defendants,
because the Court found as much in its P.O. Order denying DSM’s motion to compel
disclosure of the Honeywell Defendants’ trade secret information. The Court
disagrees.
{17} In the P.O. Order, the Court stated that “[t]he issue for decision on the
Motions [to Compel and for Protective Order] is whether Plaintiff has identified the
trade secret information it claims has been misappropriated with sufficient
particularity at this stage of the litigation to entitle Plaintiff to discovery of the
Honeywell Defendants’ confidential information and trade secrets.” P.O. Order,
2014 NCBC 50 ¶ 2 (emphasis added). The Court further explained that,
In short, Plaintiff must do more before discovery of the Honeywell
Defendants’ confidential information and trade secrets is appropriate
here. Although ‘sufficient particularity’ at this stage does not require
Plaintiff to ‘define every minute detail of its trade secrets down to the
finest detail or require a mini-trial on misappropriation’ before
Plaintiff is granted discovery of the Honeywell Defendants’ trade secret
information, Plaintiff’s identification must be sufficiently particular to
put the Honeywell Defendants on notice of the specific nature of
Plaintiff’s trade secret claims and allow the Honeywell Defendants and
the Court to determine the relevance of Plaintiff’s requested
discovery.”
Id. at ¶ 23 (emphasis added). The Court’s sole focus in the P.O. Order was the
sufficiency of DSM’s trade secret identification to permit discovery of the Honeywell
Defendants’ relevant confidential and/or trade secret information, not the
sufficiency of DSM’s trade secret identification for pleading purposes.
{18} The level of specificity required of a plaintiff to survive a motion for
judgment on the pleadings under Rule 12(c) is less than that required to permit
discovery into an adversary’s confidential and trade secret information. See, e.g.,
Le Bleu Corp. v. B. Kelley Enters., 2014 NCBC 65 (N.C. Super. Ct. Dec. 9, 2014),
www.ncbusinesscourt.net/opinions/2014_NCBC_65.pdf (holding plaintiff’s trade
secret identification sufficient under Rule 12(b)(6) but not for discovery of
defendant’s trade secrets).
{19} The allegations in DSM’s Amended Complaint, while not sufficiently
particular to permit reciprocal discovery, are nonetheless more detailed and specific,
and less sweeping and conclusory, than those allegations our courts have found to
fail the pleading standard of Rule 12, see, e.g., Washburn, 190 N.C. App. at 327, 660
S.E.2d at 585–86 (holding insufficient “business methods; clients; their specific
requirements and needs; and other confidential information pertaining to
[plaintiff’s] business”); AECOM Tech. Corp. v. Keating, 2012 NCBC 10 ¶ 21 (N.C.
Super. Ct. Feb. 6, 2012), www.ncbusinesscourt.net/opinions/2012_NCBC_10.pdf
(holding insufficient “customer lists, customer contact information, pricing
information and product information”), and are at least comparable to those
identifications our courts have found to satisfy Rule 12’s requirements, see, e.g.,
Horner Int'l Co. v. McKoy, 754 S.E.2d 852, 859 (N.C. Ct. App. 2014) (holding
sufficient under Rule 12(b)(6) plaintiff’s identification of “various raw materials and
raw material treatments; extraction, filtration, separation, and distillation
techniques; and methods for compounding of flavors, packaging, and plant utility. . .
used in the production of flavor materials derived from seven specifically identified
substances, such as cocoa, ginseng, and chamomile”); S. Fastening Sys., Inc. v.
Grabber Constr. Products, Inc., 2015 NCBC 40 ¶¶ 23–25 (N.C. Super. Ct. Apr. 28,
2015) www.ncbusinesscourt.net/opinions/2015_NCBC_40.pdf (holding sufficient
under Rule 12(b)(6) “confidential customer information such as customer contact
information and customer buying preferences and history . . . confidential freight
information, sales reports, prices and terms books, sales memos, sales training
manuals, commission reports, and information concerning SFS’s relationship with
its vendors”); Veer Right Mgmt. Grp., Inc. v. Czarnowski Display Serv., Inc., 2015
NCBC 12 ¶ 29 (N.C. Super. Ct. Feb. 4, 2015),
www.ncbusinesscourt.net/opinions/2015_NCBC_12.pdf (holding sufficient under
Rule 12(b)(6) “compilations of information, methods, techniques, and processes that
[it uses] in planning, organizing and managing all aspects associated with
identifying appropriate shows for their clients, pricing and budgeting, procuring
space, setting up booths, staffing booths during the show, tracking sales leads
generated by each show, tearing down booths after each show”); Le Bleu Corp., 2014
NCBC 65 ¶ 29 (holding sufficient under Rule 12(b)(6) “customer lists, pricing
information, transaction histories, key contacts, and customer leads”); Koch
Measurement Devices, Inc. v. Armke, 2013 NCBC 48 ¶ 19 (N.C. Super. Ct. Oct. 14,
2013), www.ncbusinesscourt.net/opinions/2013_NCBC_48.pdf (holding sufficient
under Rule 12(b)(6) “customer lists, including names, contact persons, addresses,
phone numbers . . . [customer] ordering habits, history . . . [and company] pricing
and inventory management strategies”); see also TSG, 767 S.E.2d at 877
(recognizing in directing entry of preliminary injunction that particular steps in a
process may be trade secrets, not simply the process as a whole). As a result, the
Court concludes that DSM’s trade secret identification in the Amended Complaint is
sufficiently particular to survive dismissal under Rule 12(c).
{20} The Honeywell Defendants also contend that dismissal is appropriate
because DSM has failed to state a claim for misappropriation, arguing that DMS’s
claim is essentially based on a theory of inevitable disclosure,3 a doctrine the
Honeywell Defendants assert is not recognized in North Carolina.4. (Honeywell’s
Reply Supp. 12(c) Mot., p. 9.)
{21} Although DSM’s misappropriation claim clearly has an “inevitable
disclosure” component to it—alleging that “it is clear that Defendants have
misappropriated and will inevitably continue to misappropriate DSM’s trade
secrets,” (Am. Compl. ¶ 76)—DSM’s claim is based on more than simply the fact
that Thagard had access to DSM’s alleged trade secrets and then went to work for a
competitor, as Defendants contend. (See Honeywell’s Reply Supp. 12(c) Mot., p. 9.)
To the contrary, DSM has alleged that Thagard was DSM’s chief scientist and
oversaw the development of its ECH program for DSM, (Am. Compl. ¶¶ 10–13); that
prior to Thagard’s employment with the Honeywell Defendants, “all of DSM’s
competitors in the ECH project, including Honeywell, failed the ballistics [testing
phase of the ECH project]” and DSM’s ECH design was the only design to pass the

3 The Court of Appeals has described the inevitable disclosure doctrine as follows:

In simplest terms, the [inevitable disclosure] doctrine applies when an employee who
knows trade secrets of his employer leaves that employer for a competitor and,
because of the similarity of the employee's work for the two companies, it is
"inevitable" that he will use or disclose trade secrets of the first employer. See K.
Roberson, South Carolina's Inevitable Adoption of the Inevitable Disclosure Doctrine:
Balancing Protection of Trade Secrets with Freedom of Employment, 52 S.C.L. Rev.
895 (2001).

Analog Devices, Inc. v. Michalski, 157 N.C. App. 462, 470, 579 S.E.2d 449, 454 (N.C. Ct. App. 2003).

4 This Court recently explained in RCR Enters., LLC v. McCall, 2014 NCBC LEXIS 69 ¶ 17 (N.C.
Super. Ct. Dec. 19, 2014) that “the doctrine of "inevitable disclosure" has not yet been firmly adopted
by the North Carolina courts, citing Analog, 157 N.C. App. at 470, 579 S.E.2d at 454—55 (declining
to apply doctrine) and Allegis Grp., Inc. v. Zachary Piper LLC, 2013 NCBC 13 ¶ 53 (N.C. Super. Ct.,
Feb. 25, 2013), www.ncbusinesscourt.net/opinions/2013_NCBC_13.pdf (denying motion for
preliminary injunction and discussing cases).
test, (Am. Compl. ¶ 30); that Thagard “impermissibly downloaded, transmitted,
and/or copied DSM’s Trade Secrets and confidential . . . information . . . from his
company computer” prior to his departure from DSM, (Am. Compl. ¶ 21); that
Thagard deleted emails and other information containing “vital data regarding
DSM’s ECH product and the ECH Project,” (Am. Compl. ¶ 22); and that Defendants
used DSM’s trade secrets to win the ECH contract, (Am. Compl. ¶¶ 29, 35, 36).
Based on its review of the Amended Complaint, the Court therefore concludes that
DSM has alleged more than simply inevitable disclosure and that the Honeywell
Defendants’ argument is therefore unavailing.5
{22} Accordingly, viewing the pleadings in the light most favorable to DSM, the
Court concludes that DSM has satisfactorily pled its claim for misappropriation of
trade secrets and that the Honeywell Defendants’ Rule 12(c) Motion to dismiss this
claim should be denied.
ii. DSM’s Other Claims
{23} The Honeywell Defendants condition their contention that each of the
claims in DSM’s Amended Complaint should be dismissed under Rule 12(c) on their
argument that DSM has failed to state a claim for trade secret misappropriation
under North Carolina law. Because the Court has rejected the Honeywell
Defendants’ argument, the Court concludes that the Honeywell Defendants’ 12(c)
Motion to dismiss DSM’s other claims on this basis should likewise be denied.
B. The Thagard Motion
{24} Defendant Thagard also seeks dismissal of DSM’s Amended Complaint,
and incorporates by reference and adopts in their entirety the Honeywell
Defendants’ legal arguments for dismissal of the claims asserted jointly against the
Honeywell Defendants and Thagard (i.e., misappropriation of trade secrets, unjust
enrichment, tortious interference with contract, conversion, tortious interference
with existing and prospective business relations, UDTP, and injunctive relief).

5 In light of its determination that DSM has not pled its misappropriation claim solely on a theory of

inevitable disclosure, the Court declines to consider whether the doctrine of inevitable disclosure, if
recognized in North Carolina, should be applied to these facts.
(Thagard’s Br. Supp. 12(c) Mot., p. 1.) Because the Court has denied the Honeywell
Defendants’ Motion to Dismiss these claims, the Court concludes Thagard’s Motion
to Dismiss these same claims should be denied for the same reasons.
{25} Thagard also seeks dismissal of two claims DSM has asserted against him
separately—for breach of contract and for breach of fiduciary duty.
{26} First, similar to Thagard’s arguments concerning DSM’s claims asserted
against all Defendants, Thagard’s Motion to dismiss DSM’s breach of contract claim
is premised on his contention that DSM has not adequately pled its trade secret
misappropriation claim. Because the Court has rejected Thagard’s argument as
discussed above, Thagard’s motion to dismiss DSM’s breach of contract claim should
also be denied.
{27} Next, regarding DSM’s claim for breach of fiduciary duty against Thagard,
the Court observes that “[a] claim for breach of fiduciary duty requires the existence
of a fiduciary duty.” Governor’s Club Inc. v. Governors Club Ltd. P’ship, 152 N.C.
App. 240, 247, 567 S.E.2d 781, 786 (2002). Generally, a fiduciary duty does not
arise in the relationship between an employer (here DSM) and an employee (here
Thagard). Dalton v. Camp, 353 N.C. 647, 652, 548 S.E.2d 704, 708 (2001) (“Under
the general rule, the relation of employer and employee is not one of those regarded
as confidential.”) (quotation omitted)). “Even when an employee is entrusted with
substantial managerial authority, a fiduciary relationship will not exist absent
evidence that such authority led to the employer being subjugated to the ‘improper
influences or domination of [its] employee.’” Battleground Veterinary Hosp., P.C. v.
McGeough, 2007 NCBC 33 ¶ 66 (N.C. Super. Ct. Oct. 19, 2007),
www.ncbusinesscourt.net/opinions/101907%20Order%20Webpage.pdf (granting
motion for summary judgment); see, e.g., Dalton, 353 N.C. at 651–52, 548 S.E.2d at
708–07 (stating that a fiduciary relationship exists where “‘there has been a special
confidence reposed in one who in equity and good conscience is bound to act in good
faith and with due regard to the interests of the one reposing confidence . . ., [and] it
extends to any possible case in which a fiduciary relationship exists in fact, and in
which there is confidence reposed on one side, and resulting domination and
influence on the other.’”) (internal quotation marks omitted) (emphasis in original).
“[O]nly when one party figuratively holds all the cards – all the financial power or
technical information, for example – have North Carolina courts found that the
special circumstances of a fiduciary relationship has arisen.” Kaplan v. O.K. Techs.,
LLC, 196 N.C. App. 469, 475, 675 S.E.2d 133, 138 (2009) (citation omitted).
{28} Here, DSM has alleged that “Thagard held a position of trust and
confidence at DSM as Application Manager – Life Protection, in which he, inter alia,
was the lead scientist and technical leader for DSM’s helmet and body armor
development and new grade development.” (Am. Compl. ¶ 64.) DSM has not
alleged facts, however, suggesting that Thagard exerted domination or influence
over DSM, that his awareness of DSM’s technical information caused him to hold
“all the cards” in his relationship with DSM, or that other factors indicate that the
DSM-Thagard relationship was more than a typical relationship between an
employer and an employee. Without more, the Court cannot conclude that DSM has
sufficiently alleged the extraordinary or special type of employer-employee
relationship that gives rise to a fiduciary duty. To the contrary, on the facts pled,
the Court concludes that DSM has failed to allege that Thagard enjoyed the sort of
domination or influence over DSM that our courts have found necessary to create a
fiduciary duty. See, e.g., Dalton, 353 N.C. at 652, 548 S.E.2d at 708 (no fiduciary
duty where production manager’s duties were those delegated to him by employer,
“such as overseeing the business’s day-to-day operations by ordering parts and
supplies, operating within budgetary constraints, and meeting production
deadlines,” which collectively “merely serve to define the nature of virtually all
employer-employee relationships”); Sunbelt Rentals, Inc. v. Head & Engquist
Equip., LLC, 2002 NCBC 4 ¶ 34 (N.C. Super. Ct. July 10, 2002),
www.ncbusinesscourt.net/opinions/2002%20NCBC%204%20(Sunbelt).pdf (no
fiduciary duty because employee’s “substantial discretion with respect to the day-to-
day, ‘nuts and bolts’ operation” did not constitute domination and influence over
employer); Austin Maint. Constr., Inc. v. Crowder Constr. Co., 742 S.E.2d 535, 542
(N.C. Ct. App. 2012) (no breach of fiduciary duty because “any confidence that
Plaintiff reposed in [employee] consisted of nothing more than relying on him to
competently perform his assigned duties”); compare Sara Lee Corp. v. Carter, 351
N.C. 27, 29–30, 519 S.E.2d 308, 310 (1999) (defendant “owed a fiduciary duty to
Sara Lee with respect to his role in recommending the purchase and ordering of
computer parts and related services for Sara Lee” where defendant was “authorized
and entrusted to order and purchase computer parts at the lowest possible prices”).
As a result, the Court concludes that DSM’s breach of fiduciary duty claim against
Thagard should be dismissed with prejudice.
C. Motions for Protective Order and to Compel
{29} North Carolina’s liberal discovery rules permit parties to obtain discovery
on any relevant, non-privileged matter that appears “reasonably calculated to lead
to the discovery of admissible evidence.” N.C. R. Civ. P. Rule 26(b) (2014); Analog
Devices, Inc. v. Michalski, 2006 NCBC 14 ¶ 22 (N.C. Super. Ct. Nov. 1, 2006),
www.ncbusinesscourt.net/opinions/2006%20NCBC%2014.htm (requiring production
of documents and splitting the cost of production between the parties). However,
“[i]t is equally clear under the Rules that North Carolina judges have the power to
limit or condition discovery under certain circumstances.” Id. at ¶ 40. Rule 26(c)
provides that,
Upon motion by a party or by the person from whom discovery is
sought, and for good cause shown, the judge of the court in which the
action is pending may make any order which justice requires to protect
a party or person from unreasonable annoyance, embarrassment,
oppression, or undue burden or expense, including . . . that the
discovery not be had; that the discovery may be had only on specified
terms and conditions . . . that the scope of the discovery be limited to
certain matters . . . [and] that a trade secret or other confidential
research, development, or commercial information not be disclosed or
be disclosed only in a designated way . . . .
N.C. R. Civ. P. 26(c) (2014).
{30} In the P.O. Order, the Court ordered DSM to supplement its responses to
the Honeywell Defendants’ discovery requests and to provide a more specific
identification of its trade secrets. DSM supplemented its responses in a sealed
filing on November 20, 2014 by further expanding its trade secret definitions and
listing the detailed formulas of the alleged trade secrets at issue. (DSM’s Br. Supp.
Mot. Compel, Ex. A.) In particular, DSM has provided, under an Attorneys’ Eyes
Only confidentiality designation, a 14-page, single-spaced narrative description of
its alleged trade secrets with specific descriptions concerning its fibers, materials,
and processes that it uses to make the composite shield material, ballistic fibers,
and armor products that DSM contends are at issue in this litigation and have been
misappropriated by Defendants. DSM contends that its trade secret identification
complies with the Court’s P.O. Order and North Carolina law and entitles it to
discovery of the Honeywell Defendants’ relevant confidential information and trade
secrets.
{31} The Honeywell Defendants argue in response that DSM has simply listed
its entire production process “without saying which parts were misappropriated (or
which were trade secrets)” and otherwise identified various items that are “just
well-known features of ballistic materials and the process by which these materials
are made.” (Honeywell’s Br. Supp. Mot. Prot. Order, pp. 13—14.) As such, the
Honeywell Defendants contend that DSM’s identification remains deficient at this
stage and should not justify a “fishing expedition” into their protected information.
{32} As noted in the P.O. Order, the Court’s task in resolving the parties’
competing Motions to Compel and for Protective Order is to weigh and balance the
various considerations supporting strict pre-discovery disclosure of a plaintiff’s
trade secrets, see P.O. Order ¶ 18, against those considerations counseling against
unfairly limiting a plaintiff’s ability to discover evidence supporting its claims, id.
¶¶ 19—21. See also Microwave Research Corp. v. Sanders Assocs., Inc., 110 F.R.D.
669, 672 (D. Mass. 1986) (“In cases involving the disclosure of confidential
information and/or trade secrets, the Court must strike a balance.”).
{33} In striking that balance here, the Court finds it significant that DSM has
not only alleged that Thagard had access to DSM’s trade secrets and then went to
work for the Honeywell Defendants—which are the allegations on which
Defendants focus—but also that Thagard allegedly downloaded DSM’s trade secret
information from his DSM computer, deleted other confidential information prior to
his resignation, and disclosed DSM trade secrets to the Honeywell Defendants, and
that the Honeywell Defendants, who previously had never passed the ballistics
testing phase of the ECH project, were, after hiring Thagard, able to pass the
ballistics test, secure a contract with Ceradyne for the first time, and allegedly
induce Ceradyne to terminate (and allegedly breach) its contract with DSM.
Although DSM’s supplemental identifications do not appear to specify with exact
precision which alleged trade secrets Defendants are alleged to have
misappropriated, the Court is persuaded that in these circumstances—where DSM
reasonably contends that the finished product at issue is “the result of a recipe or
formula of numerous variables” and is not publicly available for purchase or
inspection, (DSM’s Resp. Honeywell’s Mot. Prot. Order, p. 13), and where the Court
finds that the nature of Defendants’ alleged misappropriation creates an inherent
difficulty for DSM to identify which portions of its trade secrets have been
misappropriated prior to the receipt of discovery from Defendants6 —the Court
concludes that DSM has satisfactorily complied with the Court’s P.O. Order and
that the Honeywell Defendants should now be required to produce to DSM their
relevant and responsive confidential information and trade secrets.7 See, e.g.,
SCRTech, LLC v. Evonik Energy Servs. LLC, No. 08 CVS 16632 (N.C. Super. Ct.
Dec. 30, 2009) (permitting discovery of defendant’s confidential information and
trade secrets where plaintiff “describ[ed] in detail the underlying process it use[d]
for creating catalyst regeneration recipes and the criteria it use[d] to interpret
catalyst tests”).

6See, e.g., DeRubeis v. Witten Techs., Inc., 244 F.R.D. 676, 680 (N.D. Ga. 2007) (“[T]he trade secret
plaintiff, particularly if it is a company that has hundreds of thousands of trade secrets, may have no
way of knowing what trade secrets have been misappropriated until it receives discovery on how the
defendant is operating.”)

7 The Court bases its ruling on the supplemental identifications set forth in Exhibit A of DSM’s
sealed November 20, 2014 supplemental interrogatory response. In that same sealed interrogatory
response, DSM also sought to “expand[] and define[] its identification of its trade secrets at issue in
this lawsuit” by including five “classes of information” at page 4. These descriptions, however, lack
specificity and detail, are insufficient for purposes of permitting discovery into the Honeywell
Defendants’ trade secrets or confidential information, and do not factor into the Court’s ruling.
{34} Apart from whether discovery against them should proceed, the Honeywell
Defendants further contend that, in any event, DSM’s Discovery Requests are
overly broad and unduly burdensome. The parties have not devoted significant
briefing or oral argument to this objection, however. The Court concludes that the
most efficient method to resolve this aspect of the Motions for Protective Order and
to Compel is to require the Honeywell Defendants to serve revised discovery
responses and objections in light of the Court’s conclusions in this Order and
Opinion and to permit the parties an opportunity to attempt to resolve any
objections before bringing any unresolved issues to the Court for final
determination.
III.
CONCLUSION
{35} IT IS THEREFORE ORDERED, ADJUDGED and DECREED as follows:
a. The Honeywell Defendants’ Motion for Judgment on the Pleadings is
DENIED;
b. Thagard’s Motion for Judgment on the Pleadings is GRANTED in part
and DENIED in part;
c. DSM’s claim for breach of fiduciary duty against Thagard is
DISMISSED with prejudice;
d. DSM’s Motion to Compel is GRANTED in part and DEFERRED in part;
e. The Honeywell Defendants’ Motion for Protective Order is DENIED in
part and DEFERRED in part;
f. The Honeywell Defendants shall serve revised responses to DSM’s
Discovery Requests no later than 30 days after the entry of this Order
and Opinion;
g. After the Honeywell Defendants serve revised discovery responses, the
parties are directed to attempt in good faith to resolve the Honeywell
Defendants’ objections, if any; and
h. In the event the parties are unable to agree on the scope of the
Honeywell Defendants’ objections and production, the parties shall
inform the Court of such disagreement by email no later than 14 days
after service of the Honeywell Defendants’ revised discovery responses.
{36} All other requested relief is DENIED.

SO ORDERED, this the 12th day of May 2015.

/s/ Louis A. Bledsoe, III
Louis A. Bledsoe, III
Special Superior Court Judge
for Complex Business Cases